March 06, 2006
Ma Bell
Posted by Gordon Smith

Belllogo My uncle worked for "Ma Bell" for his entire career. He would not recognize the company called AT&T today. A $67 billion acquisition of Bell South? Wow!

If you are interested in this deal, here is a nice, brief summary of recent events that shaped the current AT&T:

The U.S. government broke up AT&T, then a monopoly, in order to create a more competitive industry. That yielded seven regional local phone companies and a long-distance company, which kept the original AT&T moniker. In the late 1990s, competition raged after long-distance and local companies started entering each other's territory. Telephone operators started merging, driven primarily by Edward Whitacre, the man who eventually became the architect of the new AT&T Inc....

AT&T, meanwhile, had decided in the late 1990s that its future lay in cable. Under C. Michael Armstrong, it made a $100 billion bet on that technology just as the long-distance market collapsed amid competition from cheap upstarts, affordable wireless plans -- and fraudulent accounting by rival WorldCom. Without enough cash for debt and operations, Mr. Armstrong was forced to break the company into a wireless operation and a separate phone company, named AT&T Corp., and to sell the cable lines to Comcast Corp., Philadelphia.

Two years ago, with the threat growing from Internet and cable companies, the industry's deal-making accelerated. The leading remaining Bells -- BellSouth, Mr. Whitacre's SBC Communications Inc. and Verizon Communications Inc., of New York -- began gobbling up assets. BellSouth talked to both AT&T and SBC but didn't reach an agreement with either.

In 2004, SBC acquired AT&T Wireless, outmaneuvering the United Kingdom's Vodafone Group PLC, which at the eleventh hour also made a bid. The deal instantly made Cingular, owned by SBC and BellSouth, the largest wireless operator in the country. Days after that deal was signed, Mr. Whitacre set out to acquire a long-distance company, first targeting MCI Inc. and then AT&T Corp. SBC succeeded in snaring AT&T and this year gave itself the storied name.

Histories of American Telephone and Telegraph go back much further, of course. That company was founded in 1877 (or thereabouts, depending on what you consider the founding event). More at Wikipedia.

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